Climate change is happening in a world of centralized systems where value travels slowly. Central entities have become gateways to information flow and are starting to pose challenges. In order to fight climate change, there must be room for innovation, quick adoptions and even quicker alterations. Having multiple actors spread across the world instead of having a central entity, can help tackle the problem of information asymmetries, bring transparency and eliminate inefficiencies. Blockchain technology has the potential to do exactly that, it can distribute power previously held by a central entity across all actors in a network. You have heard about how blockchain can disrupt the financial industry and eliminate banks, but what can it do for the environment, or more specifically, for Sustainable Development Goals defined by the UN? We have created a list of selected videos that explain blockchain use cases in various industries. Also, there is a more extensive blog post published earlier this month on ‘Blockchain and Sustainability’.
Just like financial sector, every other sector is comprised of some kind of authority and central entity. The energy sector, for example, suffers from inefficient electricity transmission. For, power production and power consumption take place in very different surroundings. Electrical power must travel long distances from a grid to a household resulting in energy losses. The energy loss during transmissions leads to even more energy production, a big part of which unfortunately, still comes from non-renewable resources.
Transforming the infrastructure and redesigning existing models to make power distribution more efficient would take time and tremendous amount of resources. Instead, the existing infrastructure, like photovoltaics on a top of a building, can be connected to blockchain and trade energy surplus directly with the nearest buyer. Such a model eliminates unnecessary transactions and accelerates the transmission process, contributing to sustainable consumption.
Supply chains have, too, become very complex and hard to track. This poses a challenge when a history of a product, like information on sustainable production, is requested. Even if production is sustainable, that data might be lost in paper-heavy processes. On the other hand, data can be falsified when going through several actors, resulting in misleading labels and influencing customers’ decisions. Blockchain can keep a transparent and tamper-proof record of transactions and so prove the usage of e.g. sustainable materials, real origins of a product or the working conditions for a specific region.
Similar problems occur in cross jurisdictional governance where financial aid is a subject of long bureaucratic procedures. Money streams become hard to track resulting in lost donations or very small portions reaching their original target. Donors, whether it is a country, a company or a single person, cannot see what the donated money is being used for, nor are they able to see the results of their efforts. Such intransparent actions can eventually bring donors to lose interest. Developing countries focus on much needed economic growth, so if donations do not take place, those countries will lack resources and the economic growth will not be a sustainable growth.
The level of transparency on blockchain technology can address problems described above (+ many more) and help bring us to a more sustainable world. However, understanding how blockchain can help the environment and fight climate change does not always come easy. Especially when other technologies, like Internet of Things and Artificial Intelligence, come into play.